Sunday 23 June 2019

Ways to narrow rich - poor gap

Across much of the world, the share of national income flowing to labor has fallen over the past 40 years. Taxing the rich in order to fund spending on the poor is a straightforward solution to inequality problem. But the well-heeled are adept at squeezing through tax loopholes, and at marshaling the political clout needed to chip away at high tax rates. Income inequality is the result of bad policies that favor the rich and leave everyone else struggling. A social wealth fund could narrow the gap between the rich and the poor.
  • People don't realize how wide the gap between rich and poor has become. Credit masks poverty. We tend to see and associate with people who are like us, economically.
  • There's no surer ticket out of poverty than a solid education. But that education has to be affordable and it has to be equally distributed. Poorer students are years behind their richer peers. Richer kids go to a private schools. Poorer students go to a government schools that does not perform well. Education should be a great equalizer, not a source of division. 
  • A hard day’s work deserves a fair day’s pay. It's impossible to live on today's minimum wages, which are essentially poverty wages. Decent minimum wages (for 8 hours/day, 6 days/week work) must cover home rent, utility bills, groceries, basic health care expenses, children education and some savings, for a family of 2+2. Today's minimum wages or poverty wages that covers food expenses only, for a family of 2+2. They must be at least be double or treble.
  • It's convenient for employers to argue they can't pay higher wages. Their profits indicate otherwise. The reality today is that people who are working full-time are unable meet their family(2+2)'s basic necessities.
  • Tax rates on the very rich are so low. While middle class salaried person on an average pays income tax at more than 20% on gross real income, the rich pays lesser than 10% of his gross real income. The rich must be taxed at least 40-50% of gross real income and this additional amount must be spent for better education and health care of lower income groups. Without good education and sound health, one can't work hard to prosperity.
  • Give workers a voice in their companies. Worker union's role is is declining since 40 years and their voice shrank to a whisper. Meanwhile, the economy is pushing a greater share of money to the top management. While half of the people view worker unions in a favorable light, the other half continue to see unions as inefficient or annoying, but there are other ways to give workers a voice, such as supporting employee-owned companies.
  • Ban political donations by businesses and industry. Let politics get funded by people (individuals only) and government. Compel politicians keep away from influential rich industrialists.
  • Give money to the poor -- maybe at random. Randomly giving poorer people cash may not be such a bad idea. A nonprofit organisation which is experimenting with the concept is seeing promising results. The point is not exactly how a program like this should work but that when we trust people -- when we see them as equals -- they can succeed.
  • We see rich and poor differently. We assume that these divisions are inevitable. They don't have to be.
  • Investing in women (family-friendly work policies, paid parental leave, allowing kids in the workplace etc), agriculture (providing farmers with access to seeds, plant nutrients and production practices, risk mitigation, weather insurance etc) and reforming workplace laws (raising minimum wages and universal basic income etc).
Let us not forget history. The Roman Empire was one of the richest on the planet, with wealth concentrated in the hands of a few senatorial elite and the rest were utterly poor. Warning signs of inequality were ignored and it resulted in civil war and the entire empire collapsed. Do we want that again? Let us collectively work towards making an equitable world.


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